Urban's comments come after unions – including the Australian-based Media, Entertainment and Arts Alliance, of which the New Zealand Actors Equity is aligned – joined forces and called for actors to boycott Sir Peter Jackson's The Hobbit movies because it is a non-union production.

"[The] NZ Actors Equity has my full support in their struggle to gain a higher standard of contract for New Zealand performers," Urban said.

"If he [Jackson] has the opportunity to help improve the working conditions for actors in New Zealand, to bring us more in line with our colleagues in Australia, the UK, and the US, I hope this is a dialogue which he would engage in, and an endeavour which he would support."

The Wellington-born Urban starred in two Lord of the Rings films, and has received international recognition for roles in Star Trek and The Bourne Supremacy.

Hollywood A-listers Cate Blanchett, Hugo Weaving and Sir Ian McKellen – all reported to be involved in the US$150 million (NZ$204m) The Hobbit – also support the unions' stance, according to an MEAA official.

Jackson said the Australian union was demanding The Hobbit production company – Warner Brothers-owned 3foot7 – consider a union negotiated agreement covering all performers.

"The demands of MEAA cannot be agreed to, or even considered, by law and therefore the only options ... involve closing The Hobbit down, or more likely shifting the production to Europe.

"It could so easily happen. I've been told that Disney are no longer to bring movies to Australia because of their frustration with the MEAA."

Jackson, who has called the union an "Aussie bully", said actors were independent contractors, which made union representation illegal under New Zealand law.

MEAA disagrees, citing a 2005 landmark decision that ruled a Lord of the Rings model maker was an employee, not a contractor. The Supreme Court awarded the worker costs of $38,000.

NZ Actors Equity president Jennifer Ward-Lealand said it did not want to jeopardise production of The Hobbit in New Zealand but had been seeking a meeting to discuss the issue for more than a month.

"NZ Actors Equity is concerned that local actors working on the production receive a fair and equitable contract, just as their international colleagues will do."

South Pacific Pictures chief executive John Barnett agrees with Jackson that contractors cannot be in a union.

"It's individual greed by anyone who supports it, including the actors, and an attempted power grab by the union."

Film New Zealand chief executive Gisella Garr is concerned about the impact of the standoff.

"Should New Zealand lose The Hobbit because of this dispute, we could be not just losing these films, but also our ability to attract international film productions into the future."

But CTU president Helen Kelly said production and filming of The Hobbit should meet minimum standards. "While there may be legal issues to work through, these are not an impediment to an agreement for standards to be reached with the union."

Veteran Wellington director Geoff Murphy could see both sides of the argument. "It's a difficult issue. Sometimes there can be bullying but sometimes bullying goes both ways."

In 2003, 18 actors successfully campaigned for bigger bonuses because of the success of Jackson's Lord of the Rings.

The Hobbit, a prequel to the Rings trilogy, will be shot in two continuous parts in Wellington.